Xero vs FreeAgent

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Accounting is vital in all businesses, big or small, whether it is freelance, contractual, or regular. But let’s face it, not everyone is an accountant, and not everyone can afford to hire one. That’s why bookkeeping software like Xero and FreeAgent are really useful for business owners who need to do their accounting on their own and have limited knowledge of it.

 

Let’s take a look at the pros and cons of Xero and FreeAgent, and see which one is the best fit for your business.

 

Xero

 

Xero’s tagline is “Accounting software to do your to-do” and boasts simplicity in their features and tools built especially for small business owners, accountants, and bookkeepers worldwide. It is cloud-based and secure, so you don’t have to worry about backing up your files.

 

Their multitude of features offered include:

  • Paying bills: You can track and pay bills on time, and get a clear view of your accounts payable and cash flow.
  • Claim expenses: Simplify employee expense claims. You can capture costs, submit, approve, and reimburse claims, and view your spending.
  • Bank connections, and reconciliations: You can connect your bank to Xero and set up bank feeds, and track transaction flows securely and automatically. Keep track of your finances and categorize your transactions accurately, saving you time when it comes to doing your taxes.
  • Accept payments: You can connect Xero to Stripe and other payment solutions and accept invoice payments.
  • Track projects: Quote, invoice, get paid, and track time, costs, and project profitability, all within their software.
  • Contacts and smartlists: Search a customer or supplier, see the full history of transactions and correspondence like sales, emails, invoices, and payments, as well as their contact details.
  • Capture data, and Filing: You can get copies of your original documents and key data without manual data entry, using Hubdoc. Since it is cloud-based, it can also double as your online filing system, where you can manage and share documents, contracts, bills, and receipts safely anytime, anywhere.
  • Reporting: You can track your finances with accurate accounting reports and collaborate with your accounting advisor online in real-time.
  • Multi-currency accounting: Xero support up to 160 different currencies, with up-to-date exchange rates and instant currency conversions.
  • Quote and Send Invoices: You can create quotes and invoices and send them from your phone or in the office.
  • Inventory, and Purchase orders: Manage your inventory, see what’s in stock, and what needs re-stocking, populate invoices and orders with details of items you buy and sell. Xero also allows you to create and send purchase orders online and lets you keep track of orders and deliveries.
  • Sales tax: Xero offers automatic calculation of sales tax on transactions, which you can use when preparing your sales tax returns.
  • Payroll: They also have an additional feature that allows you to pay employees and keep basic payroll records securely.

Xero offers three different plans: Starter, Standard, and Premium. 

 

The Starter plan starts at $10 per month and is good for freelancers, sole traders, and startups. You can send up to 20 invoices and quotes, enter 5 bills, reconcile bank transactions, and capture bills and receipts with Hubdoc. Their most popular plan, Standard, starts at $30 per month, and allows you to send unlimited invoices and quotes, and enter unlimited bills, in addition to Starter’s other features. Lastly, the Premium plan allows multiple-currency transactions. You can avail of their optional add-ons for a fee, which you can study on their website.

 

They offer a 30-day free trial where you can access all of Xero’s features and decide whether you want to cancel, or which plan you think is best for your business.

 

FreeAgent

 

FreeAgent’s online accounting software is made specifically for freelancers, small business owners, and their accountants. They boast automatic recurrent invoicing and late-payment reminders, hassle-free expense tracking, a bird’s eye view of your projects, automatic bank feeds, and many more.

 

Their features offered are:

  • A dashboard that allows you to monitor cash flow at a glance and see billing due dates.
  • Sending and tracking professionally designed invoices and estimates.
  • Expense tracking, and convenient data entry–simply snap a photo of your receipt and upload it on the software
  • Track time spent on projects with their built-in stopwatch or smart timesheets.
  • Connect FreeAgent to your bank accounts and automatically import bank transactions.
  • Track your projects at a glance, and see the performance of your income, expenses, and profitability per project.
  • Customize your quotes and invoices by adding your brand logo to the template.

 

FreeAgent offers all this, and more, at a starting price of $10 per month for the first 6 months, then $20 per month on all succeeding months. It also comes with sales tax reporting, and multiple-currency invoicing. If you want a risk-free experience of what they have to offer, you can avail of their 30-day free trial.

 

Comparing the two

Now that we’ve seen all they have to offer, let’s give a short comparison of the two.

 

Both software is cloud-based, handles VAT, does invoices, and both have open source API which allows for integration with other software and services.

 

FreeAgent provides all they have to offer in one simple plan, and they boast that everything in FreeAgent is unlimited–from the number of users in your account to the number of clients and projects you want to track and manage–at no additional cost. They also don’t have contracts and set up fees, so you can cancel your account at any time and still download all your data for migration to new software.

 

Their customer service is also great, and customer reviews claim that the software is easy to use, and the platform is exceptionally intuitive. The software works best for freelancers, contractors, and micro-businesses.

 

Xero offers a more extensive list of features and process automation and can cater to the needs of small- to medium-sized businesses. It provides detailed reports and insights into your business’s financials, allows you to automate and customize bank transactions, and saves regular-sized businesses a lot of time when it comes to their accounting process.

 

However, customer reviews suggest that Xero needs to step up its customer support.

 

At the end of the day, it is up to you to decide which of the two best suits the accounting needs of your small business.

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Annette Ferguson

Annette Ferguson

Owner of Annette & Co. - Chartered Accountants & Certifed Profit First Professionals. Helping Online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.